International Venture Capitalist firm Partech sets its sights on Berlin

Charmaine Li30 March 2012

Renowned Paris and San Francisco-based venture capitalist firm Partech is looking to expand its operation into Berlin as deal-flows from the German capital take a stronghold in the VC’s portfolio.

General partner Andreas Schlenker revealed the company’s plans following expectations of its new venture fund Partech International VI to reach a €140 million final close in the coming months. The boost will follow the fund’s first close of €100 million in December last year. “The new fund will have more of a focus on Germany,” Schlenker said, during a recent three day stay in Berlin.

Partech, which was established in Europe and the Silicon Valley in 1982, focuses its trans-Atlantic footprint on early and mid-stage investments in Internet services, e-commerce, social and digital media, and information technology.

Schlenker is actively working on two deals in Berlin and met with about seven companies during his visit. “We see about 1500 deals a year in Europe,” Schlenker said, but only four or five deals are made a year. “The vast majority and deal-flow is from Berlin. There’s been a real shift to Berlin over the last four years,” he added.

“It’s not just a buzz around the city, the hype is for real…”

“… and there’s hard facts that most of the interesting deals come from here,” Schlenker said. “There’s an eco-system that is building but it will take another few years until it’s established. Of course it’s not comparable to Silicon Valley but their ecosystem took decades to build.”

The company’s portfolio includes Berlin-based 3D social networking-gaming site Smeet, which attracted a Partech seed-investment in 2006.

Damp grey cloud ahead?

Schlenker forecasts a slump in venture capital funds over the next few years. “For the moment it’s very difficult for venture capitalists to raise new funds, very very difficult,” he said.

The likely culprit? “It’s a result of poor performance from the whole VC market in Europe,” he said. “The average return of venture capital since 1998 has been dismal – it’s seen negative returns. A lot of VCs are not able to raise new funds right now and it could create an issue for entrepreneurs unless others like angel-investors can fill the gap – especially in the early stage. The number of VCs will definitely go down.”